Why Does the Popular Social Media App TikTok Have Almost No Hong Kong Protest Footage?

Footage of Hong Kong’s pro-democracy movement is essentially nowhere to be found on the globally popular social media app TikTok. Instead, protesters are getting the word out on Twitter and Facebook. With roughly 1 billion global users, what could explain TikTok’s Hong Kong blackout?

While it might be that TikTok’s core demographic is teens and young adults, or that the app’s most popular content categories are viral video clips of lip-syncing and physical stunts, the more likely explanation is that TikTok is owned by a Chinese company which has historically tried to curry favor with the Communist Party of China (CCP).

Many of TikTok’s users are unaware of its Chinese roots. The app is owned by ByteDance, which also owns Douyin, the Chinese version of TikTok. Douyin, like all other social media companies in mainland China, must comply with the “Great Firewall,” which blocks any political content that the CCP finds objectionable. Political dissent is banned, though social media users tend to find shortlived ways to circumvent the firewall: Tiananmen Square is famously referred to as “May 35th,” since references to the actual date of the massacre—June 4—are scrubbed from social media by the CCP’s censors.

The Washington Post reports that “It’s impossible to know what videos are censored on TikTok: ByteDance’s decisions about the content it surfaces or censors are largely opaque,” but that “popular hashtags used by Hong Kong protesters that have spread widely across other social media barely exist on TikTok.”

“The #antielab hashtag, a central organizing post named for protesters’ resistance to an extradition bill seen as weakening Hong Kong sovereignty, has more than 34,000 posts on Instagram but only 11 posts on TikTok, totaling about 3,000 views. The hashtags for #HongKongProtests and #HongKongProtestors, some of the biggest rallying points on Twitter, return either a single video or an error message: ‘Couldn’t find this hashtag: Check out trending videos.’ The #HongKongProtest hashtag showed six videos, totaling about 5,000 views.”

Other youth-dominated visual mediums, like Instagram, are rich with Hong Kong content. The #HongKong hashtag returns 33.3 million posts on Instagram; #HongKongProtest turns up nearly 43,000 posts, and #HongKongAirport, where many of the protests have taken place, turns up more than 97,000 posts. Part of the reason TikTok might not be used to spread Hong Kong protest content might be due to low interest among the app’s predominately teen users. Or it might be the case that many Americans simply aren’t interested in Hongkongers’ ongoing fight for democracy.

But it’s not as if TikTok and Douyin are devoid of other types of political content. Douyin is used semi-cryptically by Uighurs in China’s western Xinjiang province to communicate with the rest of China that they have missing, dead, or separated relatives. This month, Nevada high schoolers used TikTok to organize a strike in solidarity with their teachers to get them better pay and working conditions. TikTok users have also used clips of art and body makeup to spread awareness of climate change, in addition to streaming coverage of climate-related protests (the #climatechange hashtag has nearly 30 million views and an endless stream of posts).

In the past, ByteDance has showed a strong degree of deference to the CCP. The Post notes:

“ByteDance last year was forced to dismantle its popular comedy app Neihan Duanzi (roughly translated, ‘implied jokes’) following a government purge, during which Chinese regulators said the app’s ‘vulgar and improper content’ had violated social morals and ’caused strong disgust.’

ByteDance founder Zhang Yiming, one of China’s richest men, issued a public, self-effacing apology for content he called ‘in deviation of socialist core values’ and pledged the company would work to ensure party ‘voices are broadcast to strength.'”

In a statement, ByteDance said that the content moderation team for TikTok is based in the U.S. and held to wholly different standards than Douyin. And in terms of content, images that have caused a stir on Douyin (such as a cartoon pig named Peppa Pig, which Chinese state-owned media claim is antithetical to Party values) are allowed on TikTok.

Still, a video-centric app would seemingly be a natural fit for those who want to spread footage of the Hong Kong protests, which are now in their 16th week.

The protests, which were sparked by a proposed extradition treaty that would have allowed suspected criminals to be extradited from Hong Kong to Taiwan and mainland China, has turned into a larger demonstration against China’s power creep. Since 1997, Hong Kong and China have used the “one country, two systems” policy, under which Hongkongers are allowed significant political freedoms. Hong Kong could lose these freedoms and be fully absorbed by China in 2047, when the policy agreement is set to expire. Proposals like the extradition treaty have many Hongkongers worried that China is speeding up the timeline and attempting to prematurely winnow away at their freedoms.

More Reason coverage of Hong Kong protests—in video form—here.

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Why Does the Popular Social Media App TikTok Have Almost No Hong Kong Protest Footage?

Footage of Hong Kong’s pro-democracy movement is essentially nowhere to be found on the globally popular social media app TikTok. Instead, protesters are getting the word out on Twitter and Facebook. With roughly 1 billion global users, what could explain TikTok’s Hong Kong blackout?

While it might be that TikTok’s core demographic is teens and young adults, or that the app’s most popular content categories are viral video clips of lip-syncing and physical stunts, the more likely explanation is that TikTok is owned by a Chinese company which has historically tried to curry favor with the Communist Party of China (CCP).

Many of TikTok’s users are unaware of its Chinese roots. The app is owned by ByteDance, which also owns Douyin, the Chinese version of TikTok. Douyin, like all other social media companies in mainland China, must comply with the “Great Firewall,” which blocks any political content that the CCP finds objectionable. Political dissent is banned, though social media users tend to find shortlived ways to circumvent the firewall: Tiananmen Square is famously referred to as “May 35th,” since references to the actual date of the massacre—June 4—are scrubbed from social media by the CCP’s censors.

The Washington Post reports that “It’s impossible to know what videos are censored on TikTok: ByteDance’s decisions about the content it surfaces or censors are largely opaque,” but that “popular hashtags used by Hong Kong protesters that have spread widely across other social media barely exist on TikTok.”

“The #antielab hashtag, a central organizing post named for protesters’ resistance to an extradition bill seen as weakening Hong Kong sovereignty, has more than 34,000 posts on Instagram but only 11 posts on TikTok, totaling about 3,000 views. The hashtags for #HongKongProtests and #HongKongProtestors, some of the biggest rallying points on Twitter, return either a single video or an error message: ‘Couldn’t find this hashtag: Check out trending videos.’ The #HongKongProtest hashtag showed six videos, totaling about 5,000 views.”

Other youth-dominated visual mediums, like Instagram, are rich with Hong Kong content. The #HongKong hashtag returns 33.3 million posts on Instagram; #HongKongProtest turns up nearly 43,000 posts, and #HongKongAirport, where many of the protests have taken place, turns up more than 97,000 posts. Part of the reason TikTok might not be used to spread Hong Kong protest content might be due to low interest among the app’s predominately teen users. Or it might be the case that many Americans simply aren’t interested in Hongkongers’ ongoing fight for democracy.

But it’s not as if TikTok and Douyin are devoid of other types of political content. Douyin is used semi-cryptically by Uighurs in China’s western Xinjiang province to communicate with the rest of China that they have missing, dead, or separated relatives. This month, Nevada high schoolers used TikTok to organize a strike in solidarity with their teachers to get them better pay and working conditions. TikTok users have also used clips of art and body makeup to spread awareness of climate change, in addition to streaming coverage of climate-related protests (the #climatechange hashtag has nearly 30 million views and an endless stream of posts).

In the past, ByteDance has showed a strong degree of deference to the CCP. The Post notes:

“ByteDance last year was forced to dismantle its popular comedy app Neihan Duanzi (roughly translated, ‘implied jokes’) following a government purge, during which Chinese regulators said the app’s ‘vulgar and improper content’ had violated social morals and ’caused strong disgust.’

ByteDance founder Zhang Yiming, one of China’s richest men, issued a public, self-effacing apology for content he called ‘in deviation of socialist core values’ and pledged the company would work to ensure party ‘voices are broadcast to strength.'”

In a statement, ByteDance said that the content moderation team for TikTok is based in the U.S. and held to wholly different standards than Douyin. And in terms of content, images that have caused a stir on Douyin (such as a cartoon pig named Peppa Pig, which Chinese state-owned media claim is antithetical to Party values) are allowed on TikTok.

Still, a video-centric app would seemingly be a natural fit for those who want to spread footage of the Hong Kong protests, which are now in their 16th week.

The protests, which were sparked by a proposed extradition treaty that would have allowed suspected criminals to be extradited from Hong Kong to Taiwan and mainland China, has turned into a larger demonstration against China’s power creep. Since 1997, Hong Kong and China have used the “one country, two systems” policy, under which Hongkongers are allowed significant political freedoms. Hong Kong could lose these freedoms and be fully absorbed by China in 2047, when the policy agreement is set to expire. Proposals like the extradition treaty have many Hongkongers worried that China is speeding up the timeline and attempting to prematurely winnow away at their freedoms.

More Reason coverage of Hong Kong protests—in video form—here.

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Stocks Surge As Trump Authorizes Release Of “Complete, Unredacted” Ukraine Transcript

Stocks Surge As Trump Authorizes Release Of “Complete, Unredacted” Ukraine Transcript

Stocks are bouncing back hard and impeachment odds tumbling after President Trump announced he has “authorized the release tomorrow of the complete, fully declassified and unredacted transcript…” someone spoiling Nancy Pelosi’s party later…

 

Stocks surged back…

And impeachment odds are tumbling down from 66% to 42%…

We suspect Biden’s election odds will also start to drop…


Tyler Durden

Tue, 09/24/2019 – 14:20

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via ZeroHedge News https://ift.tt/2lfFCjg Tyler Durden

Trump’s Ukraine Call May Not Be Impeachable, but It Sure Looks Like an Abuse of Presidential Power

The Democrats’ latest drive to impeachment rests on a single, relatively straightforward accusation: that in a July phone call with Ukrainian President Volodymyr Zelensky, President Donald Trump improperly urged the foreign leader to investigate Trump’s domestic political rival, Joe Biden, and Biden’s family—perhaps holding up foreign aid in an attempt to pressure a foreign government into creating a scandal in hopes of gaining a political advantage in advance of the 2020 election.

It increasingly appears that this allegation is true. 

For starters, we know that Trump’s personal lawyer, Rudy Giuliani, pressured Ukraine to investigate the Biden family, because Giuliani—shortly after denying the charge—admitted to doing so on national television.  

The Wall Street Journal, meanwhile, reported that in the July call, Trump himself pressured the Ukrainian leader to investigate the Biden family’s dealings in the country, raising the issue eight separate times. 

Over the weekend, Trump appeared to admit he had raised the issue, linking the conversation, which he says was about “corruption,” to Biden and his son, saying, “The conversation I had was largely congratulatory, was largely corruption, all of the corruption taking place, was largely the fact that we don’t want our people, like Vice President Biden and his son, creating to the corruption already in the Ukraine.”

Trump further insisted that “there was no quid pro quo, there was nothing.” But this morning, The Washington Post reported that nearly $400 million in military aid for Ukraine had been withheld just days before the call occurred. Trump had personally ordered his chief of staff, Mick Mulvaney, to hold up the funds. 

This, in turn, raises two questions: Why would Trump put a hold on the funds? And did he have the authority to do so? 

The money had been authorized by Congress earlier in the year, and under the Constitution, Congress has the sole power of the purse. This is why the Obama administration’s decision to spend Obamacare funds that Congress had not authorized was illegal. A president can neither spend unauthorized funds, nor decline to spend funds that Congress has authorized. 

Yet Trump not only paused the payments, but he gave no clear reason why, instructing administration officials “to tell lawmakers that the delays were part of an ‘interagency process’ but to give them no additional information,” according to the Post. The payments weren’t made until mid-September. 

So Trump personally pressured a foreign government to work with his personal lawyer to gin up what he hoped would be a politically beneficial scandal. Simply making that request, with no strings attached, would be inappropriate. But shortly before that, he personally held up federal funds that were set to go to that country—possibly in violation of the Constitution—and told his subordinates not to explain why. 

Zelensky, however, appears to have understood the reason. Sen. Chris Murphy (D–Conn.) said this week that in an early September conversation, Zelensky expressed direct concerns that “the aid that was being cut off to Ukraine by the president was a consequence” of his refusal to investigate the Bidens. 

One might be skeptical of Murphy’s story. He is, after all, a Democratic senator. But I am inclined to believe him, for two reasons. First, if it were not true, Zelensky could publicly dispute it. And second, it’s simply not surprising that Zelensky would understand the funding delay to be tied to Trump’s request for an investigation into the Bidens; when the president of the United States calls a foreign leader and asks for a personal favor at precisely the same time that funding for that leader’s country has been put on hold, the obvious conclusion would be that the two events are linked.  

So no, there may not have been an explicit quid pro quo. Trump may not have expressly said the disbursement of the funds was conditioned on the launch of a Ukrainian investigation into the Bidens. But even if there was no explicit threat, there was still presidential pressure coming at a time when money was on the line—and when Trump had personally delayed the funds.

This paints a disturbing picture. It very much looks like Trump used the power of his office—the most powerful political office in the country and the world—in an attempt to boost his personal political fortunes. The evidence so far, in other words, suggests that Trump did the thing he is being accused of doing, or something very much like it. 

There may still be more we don’t know. The whistleblower complaint that launched this story has not yet been made public, and it appears to have been based on indirect information rather than firsthand knowledge. Trump has said that the transcript of the call would show no quid pro quo; we have not yet seen the transcript. It would be useful to have all of this information on the record. 

But we already know enough to draw some tentative conclusions. And presuming the events unfolded roughly as has been reported so far, then Trump has done something that no president should do. 

Indeed, if the reports are accurate, he attempted to do something that he spent the last three years insisting he didn’t do in 2016—work directly (one might even say “collude”) with a foreign government to influence an American election to his own benefit. And he did it from the perch of elected office. This was, by all indications, an abuse of presidential power for personal gain. 

Whether this constitutes an impeachable offense is a question that House Democrats will now have to decide. It is worth remembering, however, that impeachment is not necessarily a conclusion; it is a process, the vehicle set forth by the Constitution for determining whether a president has committed acts that might justify removal from office. And those acts do not necessarily have to be criminal in nature. As Rep. Justin Amash (I–Mich) tweeted earlier this year in a thread making the case that the Mueller report justified action, “Impeachment, which is a special form of indictment, does not even require probable cause that a crime (e.g., obstruction of justice) has been committed; it simply requires a finding that an official has engaged in careless, abusive, corrupt, or otherwise dishonorable conduct.” Judge Andrew Napolitano, a Fox News legal analyst who has sometimes tangled with Trump, recently made the case that Trump’s attempts to influence Ukraine constitute an “act of corruption” worse than anything uncovered during the Mueller investigation. 

Impeachment proceedings would almost certainly drown out discussion of other issues. There is a risk impeachment could backfire politically, which is probably why Speaker of the House Nancy Pelosi (D–Calif.) has resisted it so far. Democrats, many of whom have been itching to impeach since Trump took office, run a real risk of looking like they have merely latched onto the latest controversy in order to justify a partisan action they already wanted to pursue. And should the process result in an impeachment trial, it would be held on Trump-friendly turf, in the GOP-controlled Senate. It’s hard to imagine that the final result would be his removal. 

All of which is to say that the question of impeachment is, unavoidably, a political question, and it will be resolved by political actors based on political considerations. But the question of what Trump did, and whether it was appropriate, is one that we can answer with reasonable confidence. And the answer does not make Trump look good. 

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Macron Slams Greta Thunberg After Teenage Activist Sues France Over Climate – But Leaves Out China

Macron Slams Greta Thunberg After Teenage Activist Sues France Over Climate – But Leaves Out China

French President Emmanuel Macron slammed Greta Thunberg after the 16-year-old climate activist filed a legal complaint accusing five countries of inaction on global warming in violation of the 30-year-old UN Convention on the Rights of a Child. Germany, France, Brazil, Argentina and Turkey. 

Notably, she left out China – which is the world’s worst polluter by total volume

After browbeating the UN for ‘stealing her childhood‘ on Monday, Thunberg tweeted “Today at 11:30 I and 15 other children from around the world filed a legal complaint against 5 nations over the climate crisis through the UN Convention on the Rights of the Child.” 

Thunberg’s complaint calls out nations that have ratified the UN treaty, yet – according to her – have not upheld their obligations. And again, she’s said nothing about pollution from China or India

In response to the Swedish activist, French President Emmanuel Macron told Eruope1 that her stance was “very radical” and likely to “antagonize societies.” 

“All the movements of our youth — or our not-so-young — are helpful,” said Macron, adding “But they must now focus on those who are furthest away, those who are seeking to block the way.”

The head of state stressed that he didn’t feel “that the French government nor the German government, currently, were blocking the way.”

Macron also said he wanted young people to “help us put pressure on those who are blocking the way” and to “partake in very clear action.” –Business Insider

President Trump, meanwhile, appears to be having fun with the whole thing. 


Tyler Durden

Tue, 09/24/2019 – 14:05

via ZeroHedge News https://ift.tt/2mRtHs5 Tyler Durden

Trump’s Ukraine Call May Not Be Impeachable, but It Sure Looks Like an Abuse of Presidential Power

The Democrats’ latest drive to impeachment rests on a single, relatively straightforward accusation: that in a July phone call with Ukrainian President Volodymyr Zelensky, President Donald Trump improperly urged the foreign leader to investigate Trump’s domestic political rival, Joe Biden, and Biden’s family—perhaps holding up foreign aid in an attempt to pressure a foreign government into creating a scandal in hopes of gaining a political advantage in advance of the 2020 election.

It increasingly appears that this allegation is true. 

For starters, we know that Trump’s personal lawyer, Rudy Guiliani, pressured Ukraine to investigate the Biden family, because Guiliani—shortly after denying the charge—admitted to doing so on national television.  

The Wall Street Journal, meanwhile, reported that in the July call, Trump himself pressured the Ukrainian leader to investigate the Biden family’s dealings in the country, raising the issue eight separate times. 

Over the weekend, Trump appeared to admit he had raised the issue, linking the conversation, which he says was about “corruption,” to Biden and his son, saying, “The conversation I had was largely congratulatory, was largely corruption, all of the corruption taking place, was largely the fact that we don’t want our people, like Vice President Biden and his son, creating to the corruption already in the Ukraine.”

Trump further insisted that “there was no quid pro quo, there was nothing.” But this morning, The Washington Post reported that nearly $400 million in military aid for Ukraine had been withheld just days before the call occurred. Trump had personally ordered his chief of staff, Mick Mulvaney, to hold up the funds. 

This, in turn, raises two questions: Why would Trump put a hold on the funds? And did he have the authority to do so? 

The money had been authorized by Congress earlier in the year, and under the Constitution, Congress has the sole power of the purse. This is why the Obama administration’s decision to spend Obamacare funds that Congress had not authorized was illegal. A president can neither spend unauthorized funds, nor decline to spend funds that Congress has authorized. 

Yet Trump not only paused the payments, but he gave no clear reason why, instructing administration officials “to tell lawmakers that the delays were part of an ‘interagency process’ but to give them no additional information,” according to the Post. The payments weren’t made until mid-September. 

So Trump personally pressured a foreign government to work with his personal lawyer to gin up what he hoped would be a politically beneficial scandal. Simply making that request, with no strings attached, would be inappropriate. But shortly before that, he personally held up federal funds that were set to go to that country—possibly in violation of the Constitution—and told his subordinates not to explain why. 

Zelensky, however, appears to have understood the reason. Sen. Chris Murphy (D–Conn.) said this week that in an early September conversation, Zelensky expressed direct concerns that “the aid that was being cut off to Ukraine by the president was a consequence” of his refusal to investigate the Bidens. 

One might be skeptical of Murphy’s story. He is, after all, a Democratic senator. But I am inclined to believe him, for two reasons. First, if it were not true, Zelensky could publicly dispute it. And second, it’s simply not surprising that Zelensky would understand the funding delay to be tied to Trump’s request for an investigation into the Bidens; when the president of the United States calls a foreign leader and asks for a personal favor at precisely the same time that funding for that leader’s country has been put on hold, the obvious conclusion would be that the two events are linked.  

So no, there may not have been an explicit quid pro quo. Trump may not have expressly said the disbursement of the funds was conditioned on the launch of a Ukrainian investigation into the Bidens. But even if there was no explicit threat, there was still presidential pressure coming at a time when money was on the line—and when Trump had personally delayed the funds.

This paints a disturbing picture. It very much looks like Trump used the power of his office—the most powerful political office in the country and the world—in an attempt to boost his personal political fortunes. The evidence so far, in other words, suggests that Trump did the thing he is being accused of doing, or something very much like it. 

There may still be more we don’t know. The whistleblower complaint that launched this story has not yet been made public, and it appears to have been based on indirect information rather than firsthand knowledge. Trump has said that the transcript of the call would show no quid pro quo; we have not yet seen the transcript. It would be useful to have all of this information on the record. 

But we already know enough to draw some tentative conclusions. And presuming the events unfolded roughly as has been reported so far, then Trump has done something that no president should do. 

Indeed, if the reports are accurate, he attempted to do something that he spent the last three years insisting he didn’t do in 2016—work directly (one might even say “collude”) with a foreign government to influence an American election to his own benefit. And he did it from the perch of elected office. This was, by all indications, an abuse of presidential power for personal gain. 

Whether this constitutes an impeachable offense is a question that House Democrats will now have to decide. It is worth remembering, however, that impeachment is not necessarily a conclusion; it is a process, the vehicle set forth by the Constitution for determining whether a president has committed acts that might justify removal from office. And those acts do not necessarily have to be criminal in nature. As Rep. Justin Amash (I–Mich) tweeted earlier this year in a thread making the case that the Mueller report justified action, “Impeachment, which is a special form of indictment, does not even require probable cause that a crime (e.g., obstruction of justice) has been committed; it simply requires a finding that an official has engaged in careless, abusive, corrupt, or otherwise dishonorable conduct.” Judge Andrew Napolitano, a Fox News legal analyst who has sometimes tangled with Trump, recently made the case that Trump’s attempts to influence Ukraine constitute an “act of corruption” worse than anything uncovered during the Mueller investigation. 

Impeachment proceedings would almost certainly drown out discussion of other issues. There is a risk impeachment could backfire politically, which is probably why Speaker of the House Nancy Pelosi (D–Calif.) has resisted it so far. Democrats, many of whom have been itching to impeach since Trump took office, run a real risk of looking like they have merely latched onto the latest controversy in order to justify a partisan action they already wanted to pursue. And should the process result in an impeachment trial, it would be held on Trump-friendly turf, in the GOP-controlled Senate. It’s hard to imagine that the final result would be his removal. 

All of which is to say that the question of impeachment is, unavoidably, a political question, and it will be resolved by political actors based on political considerations. But the question of what Trump did, and whether it was appropriate, is one that we can answer with reasonable confidence. And the answer does not make Trump look good. 

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How To Safely Navigate A Late-Stage Bull Market

How To Safely Navigate A Late-Stage Bull Market

Authored by Lance Roberts via RealInvestmentAdvice.com,

In this past weekends newsletter, I discussed the issues surrounding “dollar cost averaging” and “buy and hold” investing. That discussion always raises some debate because there is so much pablum printed in the mainstream media about it. As we discussed:

“Yes, a ‘buy and hold’ portfolio will grow in the financial markets over time, but it DOES  NOT compound. Read this carefully: “Compound returns assume no principal loss, ever.”

To visualize the importance of this statement, look at the chart below of $100,000, adjusted for inflation, invested in 1990 versus a 6% annual compound rate of return. The shaded areas show whether the portfolio value exceeds the required rate of return to reach retirement goals.”

“If your financial plan required 6% “compounded” annually to meet your retirement goals; you didn’t make it.”

Does this mean you should NEVER engage in “buy and hold” or “dollar-cost averaging” with your portfolio?

No. It doesn’t.  

However, as with all things in life, there is a time and place for application. 

As shown above, when markets are rising, holding investments and adding to them is both appropriate and beneficial as the general trend of prices is rising. 

There is a reason why not a single great trader in history has “buy and hold” as an investment rule. Also, when it comes to DCA, the rule is to never add to losers…ever. 

17. Don’t average trading losses, meaning don’t put ‘good’ money after ‘bad.’ Adding to a losing position will lead to ruin. Ask the Nobel Laureates of Long-Term Capital Management.” – James P. Huprich

That reason is the permanent impairment of investment capital. By investing fresh capital, or holding current capital in risk assets, during a market decline, the ability of the capital to create future returns is destroyed.

“17. Don’t focus on making money; focus on protecting what you have.” – Paul Tudor Jones

Investing is about growing capital over time, not chasing markets. 

This is also why all great traders in history follow the most simplistic of investing philosophies:

“Buy that which is cheap, sell that which is dear” – Ben Graham

It’s Getting Very Late

When trying to navigate markets, and manage your portfolio, you have to have a reasonable assumption of where you within the investment cycle. In other words, as Jim Rogers once quipped:

“It’s hard to buy low and sell high if you don’t know what’s low and what’s high.”

This is the problem that most individuals face during late-stage bull market advances. Following a “bear market,” most individuals have been flushed out of the markets, and conversations of “armchair investing methods” vanish from the financial media.

However, once the “bull market” has lasted long enough, it becomes believed that “this time is different.” It is then you see the return of concepts which are based on the assumption:

“If you can’t beat’em, join’em.” 

That is where we are today and we have created a whole bunch of sayings to support the idea of why markets can’t fall:

  • BTFD – Buy The F***ing Dip

  • TINA – There Is No Alternative

  • The Central Bank Put

  • The Fed Put

  • The Trump Put

You get the idea.

However, there is little argument that valuations are expensive on a variety of measures, as noted by Jill Mislinksi just recently.

Importantly, markets are also grossly extended on a technical basis as well. The chart below shows the S&P 500 on a quarterly basis. Note that the index is pushing rather extreme levels of extension above its very long-term moving average, and is more overbought currently than ever before in history. 

Note that a reversion to its long-term upward trend line would take the market back to 1500 which would wipe out all the gains from the 2007 peak. Such a correction would also set back portfolio returns to about 2% annualized (on a total return basis) from the turn of the century.

As a portfolio manager, however, I can’t sit in cash waiting for a “mean-reverting” event to occur. While we know with absolute certainty that such an event will occur, we don’t know the “when.” Our clients have a need to grow assets for retirement, therefore we must navigate markets for what “is” currently, as well as what “will be” in the future. 

The question then becomes how to add equity exposure to portfolios particularly if one is in a large cash position currently.

How To Add Exposure In A Late Stage Bull Market

The answer is more in line with the age-old question:

“How do you pick up a porcupine? Carefully.”

Here are some guidelines to follow:

  1. Move slowly. There is no rush in adding equity exposure to your portfolio. Use pullbacks to previous support levels to make adjustments.
  1. If you are heavily UNDER-weight equities, DO NOT try and fully adjust your portfolio to your target allocation in one move. This could be disastrous if the market reverses sharply in the short term. Again, move slowly.
  1. Begin by selling laggards and losers. These positions are dragging on performance as the market rises and tend to lead when markets fall. Like “weeds choking a garden,” pull them.
  1. Add to sectors, or positions, that are performing with, or outperforming, the broader market. (We detail these every week at RIAPRO.)
  1. Move “stop-loss” levels up to current breakout levels for each position. Managing a portfolio without “stop-loss” levels is like driving with your eyes closed.
  1. While the technical trends are intact, risk considerably outweighs the reward. If you are not comfortable with potentially having to sell at a LOSS what you just bought, then wait for a larger correction to add exposure more safely. There is no harm in waiting for the “fat pitch” if the current market setup is not viable.
  2. There is nothing wrong with CASH. In investing, if you don’t know what to do for certain, do nothing. There is nothing wrong with holding extra cash until you see the “fat pitch.”
  3. If none of this makes any sense to you – please consider hiring someone to manage your portfolio for you. It will be worth the additional expense over the long term.

The current rally is built on a substantially weaker fundamental and economic backdrop. Thereforeit is extremely important to remember that whatever increase in equity risk you take, could very well be reversed in short order due to the following reasons:

  1. We are moving into the latter stages of the bull market.
  2. Economic data continues to remain weak
  3. Earnings are beating continually reduced estimates
  4. Volume is weak
  5. Longer-term technical underpinnings are weakening and extremely stretched.
  6. Complacency is extremely high
  7. Share buybacks are slowing
  8. The yield curve is flattening

It is worth remembering that markets have a very nasty habit of sucking individuals into them when prices become detached from fundamentals. Such is the case currently and has generally not had a positive outcome.

What you decide to do with this information is entirely up to you. As I stated, I do think there is enough of a bullish case being built to warrant taking some equity risk on a very short-term basis. We will see what happens over the next couple of weeks. 

However, the longer-term dynamics are turning more bearish. When those negative price dynamics are combined with the fundamental and economic backdrop, the “risk” of having excessive exposure to the markets greatly outweighs the potential “reward. “

While it is certainly advisable to be more “bullish” currently, like picking up a “porcupine,” do so carefully.


Tyler Durden

Tue, 09/24/2019 – 13:45

via ZeroHedge News https://ift.tt/2mVCZDE Tyler Durden

Nio Plunges 22%, Drags Down Tesla, After Slashing Headcount By Over 20%

Nio Plunges 22%, Drags Down Tesla, After Slashing Headcount By Over 20%

Electric carmaker NIO announced on Tuesday morning that it would be slashing its global headcount by more than 20% to 7,800 by the end of the third quarter. This is down from over 9,900 in January 2019, according to Bloomberg. The company said the slashing of jobs was “in response to the overall tempered market conditions” in a statement. We have routinely documented the ongoing collapse of the global automotive industry – not just in China, but also in key markets like Europe and North America – over the last 18 months. 

Meanwhile, Nio stock, which had already been decimated by more than 80% over the last 12 months, continued its descent on Tuesday, falling about 22% as of the time of this writing. 

As part of its announcement, Nio said it has implemented “comprehensive efficiency and cost control measures” as a result of market conditions. The company will also aim to pursue more restructuring, including spinning off some non-core businesses by year end.

According to Bloomberg, the company also offered the following financial guidance:

  • 2Q revenue 1.51 billion yuan, estimate 1.31 billion yuan (range 1.12 billion yuan to 1.50 billion yuan)
  • 2Q adjusted loss per share 3.11 yuan, estimate loss/share 1.66 yuan (range loss/share 71 RMB cents to 2.40 yuan) 
  • Sees 3Q rev 1.59b yuan-1.66b yuan, “representing an increase by approximately 5.6% to 10.3% from the second quarter of 2019”
  • Sees 3Q vehicle deliveries to be between 4,200 and 4,400 units, “an increase of approximately 18.2% to 23.8% from the second quarter of 2019”
  • 2Q loss per share 3.23 yuan
  • 2Q gross margin -33.4%

In a note out early Tuesday afternoon, GLJ Research analyst Gordon Johnson said the news was bad across the board for automakers in China: “While some may be (incorrectly in our view) viewing this as a positive for everyone who isn’t NIO, NIO’s 2Q19 numbers and 3Q19 guidance suggest demand in China for EVs is very bad.”

He explained his reasoning: “Why? Well, simply put, while NIO recently launched its ES6 model (their least expensive car), they are guiding to a sequential decline of -20% when looking at deliveries in September vs August. And August deliveries of 1,943 missed their guided range of 2,000-2,500.”

Nio’s collapse also dragged down Tesla stock, which had slumped more than 5% as of the time of this writing. 

Johnson explained why the Nio news could also be material for Tesla and its shareholders:

“Against this backdrop, NIO competitor TSLA is currently spending billions to increase capacity/supply in the struggling Chinese EV market. When considering large TSLA holder Baillie Gifford is a large NIO shareholder as well, should BG have to start selling to maintain liquidity, it could be quite ugly for all publicly traded EV stocks.”

Recall, days ago, we posted that S&P was predicting that global light vehicle sales would fall by 2%-3% in 2019 and, to add insult to injury, there would be “no growth” throughout 2020 and 2021. In a research note out last Tuesday, S&P said that sales in China will decline by 7%-9% this year and that U.S. sales will see a 3% decline. It also predicts a 2% drop for European sales for 2019. 

The note’s base case assumptions for 2020 and 2021 are 0% to 1% growth in global light vehicle sales. S&P also expects weakness in “all market regions except China, which may see a modest rebound, not before 2021”. S&P believes that manufacturers will grapple with margin erosion in the mass market segment and will struggle to pass through increased costs of connectivity, electrification and autonomous driving. 

A few weeks ago we noted that the world’s biggest auto market, China, plunged deeper into contraction, with the country’s China Passenger Car Association releasing preliminary data for August that in no way indicates that the trend could be reversing. The CPCA reported that sales of sedans, SUVs, minivans and multipurpose vehicles in August fell 9.9% to 1.59 million units. 

It has been the industry’s largest downturn in three decades. China has tried to roll out several stimulus measures to help the industry, including loosening car purchase restrictions, but they have done little to encourage consumption thus far. 


Tyler Durden

Tue, 09/24/2019 – 13:25

via ZeroHedge News https://ift.tt/2mw28Ev Tyler Durden

Foreign Buyers Surge In Blistering 2Y Treasury Auction

Foreign Buyers Surge In Blistering 2Y Treasury Auction

After two consecutive tailing auctions, now that the Fed is cutting rates, moments ago the US Treasury sold $40 billion in 2 year paper in what was the best 2Y auction in years.

Stopping at a high yield of 1.612%, the high yield stopped through the When Issued by 0.1%, ending the streak of two tailing auctions, and just above last month’s 1.516% yield, which was the lowest going back to the summer of 2017.

The Bid to Cover rebounded from last month’s 2.598 to 2.636, the highest since May 2019 and above the six auction average of 2.59.

Finally, the internals were solid as well, with Indirects taking down a whopping 57.01%, the highest since January 2018, and higher above the recent average of 48.24%. And with Directs taking down 15.93%, below the recent average of 21%, meant Dealers were left holding 27.1% of the auction. The question is how much of this was bought by liquidity-challenged dealers, and will be quickly repoed back to the Fed in the coming days.


Tyler Durden

Tue, 09/24/2019 – 13:19

via ZeroHedge News https://ift.tt/2leTL08 Tyler Durden

Even Social Engineers Don’t Want Their Kids Used as Demographic Pawns

Is schoolenfreude a word? If so, a Wall Street Journal article from Saturday produced buckets of the stuff.

Seems an area man who helped design the devilishly complicated algorithm that determines the middle school designations for New York City public school kids, and who also supported the trailblazing (and controversial) diversity plan in Brooklyn’s mediagenic District 15, found himself on the losing end this spring when his incoming middle school daughter was assigned to just her 10th-ranked choice of government-run school. So what did Neil Dorosin and family do?

They chose a charter school closer to home. And I do not blame them, not one little bit.

The school his daughter was assigned to, Sunset Park Prep, features comparatively poorer students (a majority of them, unlike Dorosin, are nonwhite) achieving comparatively decent test results, so that was attractive enough to include on her school rankings (as it was for my daughter, who is in the same school district and age group). But: “He worried about the travel distance. He said his daughter cared that none of her friends were going to Sunset Park Prep, some were going to the charter, and she found the charter’s building more appealing.”

As Matthew Ladner wrote in an unrelated piece about New York charter schools yesterday, “We should celebrate anytime any family finds a good fit school for their children. They paid their taxes after all; if they are happy, then so am I.” Indeed. And there is no ammunition for a charge of hypocrisy here, either, as Dorosin does not to my knowledge share Mayor Bill de Blasio’s unreasonable hostility to charters.

But the initial experiences of parents on the vanguard of District 15’s experiment with “controlled choice”—as in, families choose their ranked preferences, then the school system chooses their assignment based on a mixture of lottery and demographic leveling—suggest that more people than before are choosing exit rather than compliance.

Dorosin’s Brooklyn Urban Garden School (BUGS), one of five privately-run charters in a district that has 11 Department of Education-operated middle schools, “had a surge of interest in the past year,” the Journal reported:

Its officials said 502 children living in District 15 entered the charter’s lottery for sixth-grade for this fall, up from 315 the previous year, before the district’s new admissions method. Now 77 of its sixth-graders come from the district, up from 37 before.

That’s an eye-popping increase. We don’t yet know the full enrollment picture for this fall, but a previous Journal article from the summer reported that the number of incoming sixth graders appealing their designations jumped from 350 to 450 (or from around 13 percent of the incoming class of middle schoolers to 17 percent), while the number of appeals granted plummeted from 59 to 14. As I noted in this Twitter thread at the time:

At just one middle school, the long-maligned Charles O. Dewey (I.S. 136) in the same Sunset Park neighborhood as Dorosin’s assigned school, appeals went up from 22 to 50. A disproportionate number of my daughter’s classmates at her comparatively affluent and successful elementary school were assigned faraway I.S. 136 despite not even including it in their rankings. (You can select up to 12 publicly run schools; charters are handled separately.) I have yet to hear of a single one of those families accepting their assignment.

Meanwhile, we know of at least three parents of District 15 elementary public schoolers who have either moved or are in the process of moving away from this area altogether as a direct result of their middle school placements. Have I mentioned that my elementary school subdistrict may soon be changing to controlled choice?

As it happens, just today—the same day as a crucial public meeting about the fate of my youngest daughter’s elementary school—the Cato Institute has published a new policy paper about controlled choice, by George Mason University education professor emeritus David J. Armor. Keep in mind that this particular policy approach toward integrating schools, which is the successor of the racial-integration busing policies of the 1970s, is preferred not just by my district, but by New York City’s whole Department of Education, and pretty much the whole school-diversification establishment.

So what does Armor conclude?

In larger school districts, controlled-choice plans can generate controversy and middle-class flight among parents who prefer neighborhood schools, similar to the “white flight” observed in earlier decades when mandatory busing was used to attain racially balanced schools.

A review of controlled-choice plans in six large districts in North Carolina, Kentucky, and Florida shows considerable and ongoing higher-income and white losses in these districts. While other demographic forces cannot be ruled out (e.g., urban to suburban movement for reasons unrelated to schools), neither can the unpopularity of controlled choice. More important, none of these districts has demonstrated significant closing of achievement gaps between higher- and lower-income students, one of the main justifications for these plans.

For larger school districts…it is clear from the cases reviewed here that controlled choice for economic integration is not working as intended. It is still controversial, and it may be contributing to growing racial and economic isolation among some larger school districts. Most importantly, this policy has not been successful at achieving one of its major goals: closing achievement gaps.

Ouch.

As I have said whenever asked, I don’t know if my school district’s new system will be good or bad, and I’m happy that some populations that previously did not even think to apply to some of the highest-reputation middle schools got admitted this year. Choice is a wonderful thing, and poorer families especially should have more of it.

But the lure of control is ever-present. Two weeks after a Democratic presidential debate spat between Sen. Kamala Harris (D–Calif.) and former Vice President Joe Biden made school busing national news again, New York Times Magazine writer Nikole Hannah-Jones wrote a deeply knowledgeable and interpretatively questionable cover story with the provocative headline, “It Was Never About Busing: Court-ordered desegregation worked. But white racism made it hard to accept.”

I can testify that Hannah-Jones’ conclusion resonates with many of the people driving diversity-conscious admissions changes to schools in New York and elsewhere: “Busing did not fail. We did.”

Parents who balk at accepting the results of the new busing will be branded as racist, one of the gravest accusations one can level at another human being in modern society. As one woman just emailed me while I was finishing this post:

For schools to become integrated and, more importantly, equalized, it means that some kids will suffer. Those kids are likely to be those who already have an enormous amount of social capital, if not downright wealth. They will survive. If their parents choose to send them to private school instead, let it be on their conscience about how they are supporting a racist and classist system and how they are, indeed, racists.

All parents, Neil Dorosin included, are going to do what they think is best for their kids. If the school they are assigned to is objectionable on grounds of distance, or test scores, or curriculum, or cleanliness, or safety, or leadership, they will look for ways to opt out. And if in the process they are treated like privilege-hoarding accomplices to a system of white supremacy, then that noise you will hear is the slamming of doors behind them.

“The whole process [has] left us so traumatized and frankly angry that I can’t see myself going through it again for our younger daughter,” one District 15 parent of a sixth grader emailed me last week. “And, we look forward with terror at the high school admissions and the real possibility that the same forces will be at play by the time we’re up. It’s become [such] a toxic subject of our lives that I really can’t live with anymore. So, [the] end result is that we have decided to leave Brooklyn altogether.”

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